153 Seized in Scheme to Launder Drug Funds : Crime: Worldwide sting operation included dummy La Jolla firm. $44 million in cash was also seized.

U.S. drug agents working out of a phony La Jolla corporation they set up to launder profits for a Colombian cocaine cartel have ended a three-year sting, arresting 153 suspects worldwide and seizing $44 million, officials said Monday.

The mammoth investigation exposed a new and alarming partnership between Colombian drug lords and the Italian Mafia, said Julius C. Beretta, special agent in charge of the Drug Enforcement Administration office here. Details of the operation were announced Monday at news conferences in the United States and in Rome.

DEA agents worked with narcotics police in Italy, Colombia, Spain, Canada and Britain to snare seven high-ranking money managers for the Cali cocaine cartel outside Colombia, authorities said. An eighth avoided arrest when he failed to keep a date in Caracas, Venezuela, where authorities were waiting, a DEA official in Washington said.

The arrested money managers included Rodrigo Carlos Polania, a former inspector of Colombia’s national bank who is suspected of being a “plant” for the cartel in the anti-narcotics financial task force in Bogota, officials said. He was arrested Friday in San Diego.

Glenda Escandon Sanchez, an official at Banco Atlantico in Tijuana, was also arrested Friday in San Diego. Escandon was alleged to have converted cash proceeds from the sale of cocaine to checks issued by Mexican banks.

DEA and U.S. Customs agents began the investigation in September, 1989, when they established a fake company, The Americas Ventures Associates, in La Jolla. Undercover agents posed as money-laundering “facilitators” and used informants to identify several major drug money brokers in Colombia, officials said.

The Colombian brokers then acted as middlemen between the Cali cartel kingpins and the undercover launderers. Before agents began making arrests last week, they had laundered about $53 million for the drug lords since the investigation began, Beretta said.

The investigation, dubbed “Operation Green Ice,” was conceived by Thomas J. Clifford, assistant special agent in charge of the DEA’s San Diego field office. Clifford planned earlier DEA money-laundering investigations in Florida, Beretta said.

On Monday, DEA officials said the sting was successful beyond all expectations.

“We have seized $44 million and have in fact disrupted the cartels,” Beretta said.

The drug traffickers made so much money from drug sales that Beretta labeled their attempts to launder the proceeds “pervasive.”

“Even as the arrests were going down (on Friday), we were still being contacted by people who wanted their money laundered,” Beretta said.

However, drug agents said they expect the arrests and seizures to make no more than a dent in the Colombians’ drug smuggling operations.

“We’re by no means concluding the (cartel’s drug) operation. Our purpose was to disrupt it,” Beretta said.

U.S. Deputy Atty. Gen. George Terwilliger, contending that the operation had dealt a “crippling blow” to the Cali cartel, said at DEA headquarters: “Our aim is to drive a stake though the heart of the illegal drug business by attacking their financial operations.”

Terwilliger, in an interview, denied any connection between ending the investigation and criticism of the Bush Administration’s anti-drug efforts by Democrats during the presidential election campaign. Instead, he said the operation was called off for fear of crossing the point where money laundering by government undercover agents would benefit the cartels beyond the dividends to law enforcement.

Beretta offered another explanation for ending the investigation. He said that “our people were getting tired” of the three-year investigation.

Following the Colombians’ instructions, the operation established leather goods shops in Houston, Ft. Lauderdale, Miami, Chicago and New York. Operated as subsidiaries of The Americas Ventures Associates, the shops were used to import merchandise from Colombia. This created a legitimate paper trail for sending U.S. currency to banks for the cartel in Colombia, Panama and elsewhere, a DEA official said.

The Americas was equipped with hidden video cameras and recording devices--typical trappings of law enforcement sting operations.

The stores’ paperwork would be falsified so one ton of leather was listed as 20 tons, justifying the export of greater amounts of currency. “They didn’t care about the leather,” one DEA official said. “All they wanted was the paperwork.” The official said the operation grew so large that undercover agents were beginning to ask: “How much leather can I handle?”

It was also feared that the operation had grown to the point that a leak could easily occur and the enterprise could come tumbling down “like a house of cards,” the DEA official said.

“Our undercover agents posed as (illicit) international money brokers,” said Ralph Lochridge, a Los Angeles-based agent. “The cartels’ big problem had been getting the cash (from drug sales) out of the country. They had to have some way of getting it into the international banking system.”

Lochridge said that, after undercover agents won the drug dealers’ confidence, the dealers--at parking lots, on street corners and in restaurants and hotels--handed over large sums in small-denomination bills, “sometimes in laundry bags, sometimes in suitcases, sometimes in cardboard boxes. . . . More than $12 million was laundered in the Los Angeles area.” He said the DEA transferred the money to secret bank accounts set up by the cartels in Switzerland and the Grand Cayman Islands.

While U.S. undercover fronts were limited to the leather goods business, their counterparts in Rome ran a company that laundered millions of dollars by posing as a pan-European animal protection society, Italian police said.

Among the three dozen or so arrested in Italy, police said, were important members of the Sicilian Mafia, the Neapolitan Camorra and the Calabrian ‘Ndrangheta. (DEA figures listed only 29 individuals arrested in Italy, and Italian authorities put the total worldwide arrest figure at 201, vs. DEA’s 169. Officials could not resolve the differences Monday.)

Besides the alleged mob members, those arrested included seemingly upright businessmen in Sicily and an 80-year-old woman in Mantua in northern Italy, who was described as the aunt of the head of a dummy money-laundering company in New York. She had more than $40 million in her bank account, police said.

A potentially top figure, arrested by the Italians, was Jose Duran, whose four aliases include Raul Grajales and who was billed by Italian authorities as “the most important distributor in the world for the Colombian drug cartels.” Duran, whom Italians said was known as “the Pope” in Colombia, was identified as one of the cartel’s top money managers and was carried on DEA’s list as Grajales.

DEA officials said that positive identification of Grajales would have to await a fingerprint check in Colombia, not expected before today.

Arrested with him at a bar near the Spanish Steps in Rome was Bettein Martens, a woman described by authorities as a major Dutch money launderer, and another Colombian, Pedro Felipe Villaquiran. Italian authorities said Duran brought Villaquiran to Europe to introduce him to organized crime contacts there.

DEA Administrator Robert C. Bonner said federal grand juries in Los Angeles and San Diego returned indictments last week against 107 defendants, who were charged with illegally laundering drug money for the cartels and other offenses.

Ostrow reported from Washington, Montalbano from Rome and Reza from San Diego. Staff writer Eric Malnic contributed to this story from Los Angeles.